Today, IBM is the Most Open and Trusted AI for Businesses! Here’s Why

IBM has transformed itself through acquisitions, breakthrough technologies, and AI innovations

IBM also known as International Business Machines is a global information technology and innovation leader providing computer hardware, software, and infrastructure and hosting services. Headquartered in Armonk, NY, the company is distinguished as being first and foremost company, serving the world's leaders in their industries. IBM is uniquely positioned in bringing innovative technology and industry expertise on a foundation of trust and security as an integrated proposition to its clients. This integrated proposition permits the company to deliver business impact that matters to its clients, impact that requires bringing together technologies such as hybrid cloud, data and AI insight with workflow and advanced industry skills.

IBM has transformed itself through acquisitions, breakthrough technologies and social innovations. In the year 2019, the company generated US$77.1 billion in revenue, operating gross profit margins of 48% and operating earnings per share of US$12.81. IBM had strong cash generation with net cash from operating activities of US$14.8 billion and free cash flow of US$11.9 billion. The company returned US$7.1 billion in capital to its shareholders, including dividends of US$5.7 billion.

To gain momentum in its digital transformational technologies, IBM has announced that the company will be splitting into two units. According to the company CEO Arvind Krishna, one unit will focus on managing clients' IT infrastructure, while the other more focused unit of IBM will be devoted to developing cloud computing and AI. The financial details pertaining to the split have not been disclosed by the company, but IBM's acquisition of Red Hat last year is the driving force behind the company's split.

IBM combines the portfolio, people, and sense of purpose necessary to meet today's enterprise demands. Over the last decade, the company has forged the foundations of its end-to-end, integrated value proposition through a series of transformative actions.

Strategic Capital Investments to Drive Innovation

IBM is known to be flamboyant while investing in technology. Ever since its inception, the company has extensively invested to make the technology more perceptible and accessible for everyone. In an effort to stimulate technological innovations, the company's major investment areas are cognitive solutions, Global Business Services, technology services and cloud platforms, and global financing. Each year the investment in IBM's research and development contributes six to seven percent of the company's total investment.

Since 2012, IBM has devoted significant capital to developing new capabilities. The company invested over US$120 billion to transform its strategy, portfolio, and workforce. Simultaneously, the tech giant returned US$97 billion to shareholders. IBM also invested nearly US$30 billion in capital expenditures, building its cloud and cognitive offerings and strengthening its security and services capabilities. To bolster its research and development, the company has invested US$45 billion in R&D, forging the futures of cloud, AI, blockchain, and quantum computing. In 2019, its inventors received 9,262 U.S. patents, the most ever awarded to a U.S. company. It was its 27th straight year of patent leadership for the company.

IBM invested US$200 million in the new global headquarters for the Internet of Things (IoT), business in Munich, with new IoT capabilities around blockchain and security. In 2016, IBM heavily invested US$6 billion in Research and Development, nearly US$ 4 billion in capital expenditure and in repurchasing its common stock worth US$3.5 billion. 

The company has also invested US$200 million in building new global security headquarters in Cambridge Massecheuts, which features the industry's first Cyber Range for the commercial sector. It allows the customers to prepare for and respond to cyberattacks using live malware and real-world scenarios. The company also invested in its global network IBM X-Force Command centres that handle over 1 trillion security events per month and uses cognitive technologies like Watson for client services including chat sessions and data delivery.

For the year 2017, IBM's investment in R&D accounted to be US$5.6 billion. The company extensively invested in its cloud and AI services, with an investment of US$3.3 billion in net capital expenditures. In 2018, IBM invested US$5.4 billion in research and development. The company also became the highest patent earner amongst the technology giants. Reports suggest that IBM is also investing to rectify the dearth of AI skill shortage by launching a STEM initiative for girls. This initiative will teach 80,000 girls across India about coding and building AI models and has the aim of reaching 2,00,000 students by 2022.

The company has invested US$25 million, in Code and Response, a four-year deployment initiative to put open source technology as part of coding challenges such as Call For Code, in the areas where it is most needed. The initiative includes resources to build, fortify, test, and implement solutions on a large scale. In partnership with Clinton Global Initiative University, this project is first piloted in Puerto Rico, North Carolina, Osaka and Kerala.

For 2019, the company has invested US$120 billion to transform the company's strategy, portfolio, and workplace Management. A total amount of US$30 billion was expanded in capital expenditures, thus bolstering the company's cloud, security, and services capabilities. Moreover, IBM invested US$ 45 billion in research and development, thus accelerating the future of Cloud, AI, Blockchain, and quantum computing. Over the past few years, the company has invested in building 57 studios and 17000 IBM iX digital consultants for assisting the company's clients.

Till June 2020, the company's investment in research and development accounted to be US$1.582 billion.

Strengthening Businesses with Product Breakthroughs

IBM has been focused on developing innovative tools and technologies for businesses over the years. The company's investments have reshaped it to lead in the emerging, high-value segments of the IT market, including analytics, artificial intelligence, cloud, security, blockchain, and quantum computing. Since IBM's investments are more focused on R&D-backed breakthrough innovations, it has created the company's strongest portfolio ever and has driven effective outcomes.

IBM Cloud: Cloud computing is one of the most product segments representing 27%, a US$21.2 billion business, of IBM's revenue. In the past year, the company has substantially improved its public cloud offerings through IBM Cloud, including significant improvements in ease of use, 99.99% availability, and the strongest security posture in the industry. IBM Cloud has grown too diverse business areas offering enterprises public, private, and hybrid cloud solutions. In 2019, IBM introduced the world's first financial services-ready public cloud, secure and purpose-built for the industry.

IBM Watson: IBM is the world's enterprise leader in AI offering IBM Watson to assist companies to produce better decision-making and business outcomes through over 30,000 client engagements, deployed in customer service, healthcare, supply chain, weather forecasts, energy exploration, and other fields. Today, IBM Watson is the most open and trusted AI for businesses, available to run in any environment – on-premise, and in private and public clouds.

IBM Blockchain: IBM improves trust and transparency across business networks through IBM Blockchain by creating a new way for clients to share and secure data. The product powers over 500 client projects, with more than 85 active networks transforming supply chains, global shipping, and cross-border finance. IBM Food Trust, TradeLens, and other initiatives streamline supply chain processes, bringing trust and transparency to transactions.

IBM Security: It was built for industry-leading compliance, threat monitoring and container security. IBM Security has 8,000 subject matter experts serving more than 17,000 clients across 130+ countries. The industry's leading AI and cloud-based security solutions include IBM Security Connect, launched in 2018, which allows clients to glean, integrate and assess security data across multiple applications and tools, in a vendor-agnostic way.

IBM Systems produces innovative infrastructure for AI and hybrid cloud. The z14 is one of IBM's most successful mainframe programs in history, with broad global adoption across 27 different industry segments. In addition, the U.S. Department of Energy's POWER9-based supercomputers, Summit and Sierra, was ranked the most powerful supercomputers in the world in 2018.

IBM Services was a key driver of IBM's performance in 2018. Forty-seven engagements worth over US$100 million each helped major clients, including Bank of the Philippine Islands, Juniper Networks, Nordea, Westpac, and Aditya Birla Retail, to move to the next stage of their digital transformations. Through IBM Services, the company helps its clients around the world to deploy AI to their core business processes and workflows, infusing their businesses with automation, intelligence, and continuous learning to transform everything from supply chains and HR to finance and operations.

Quantum Computing: For decades, IBM has led the R&D of quantum information science and quantum machines. The company was the first to give the world the chance to experience it by putting a quantum computer on the cloud in 2016. Today, quantum computing is moving out of the lab and into the hands of users and commercial clients worldwide.

In 2018, IBM also launched a new service called IBM Talent and Transformation, addressing the often-overlooked cultural aspects of AI. This service helps its clients ensure their teams have the right skills and talent, with the supporting culture and work environment, to support a new way of working that is critical to scaling AI for business.

Expanding Business Horizons Through M&A

IBM is the pioneer of a lucrative business through acquisition and mergers. The company has made 185 acquisitions since 2001, at a total cost of US$87.2 billion. From extending its services in advanced weather forecast to assisting clients with risk management in utilities, IBM's strategy to spread its operation is applauded by the experts.

In 2016, IBM acquired The Weather Company, the world's most widely recognized weather media company for US$2 billion. With The Weather Company, the IBM research has made a global forecasting model known as Deep Thunder, which trains the ML model to help businesses predict the actual impact of weather.

In the same year, IBM acquired Truven Health Analytics, which added substantial new capabilities to the Solutions Software portfolio, at a value of US$2.6 billion, and integrated its technology and data for boosting the Watson Health business unit. The company also acquired cybersecurity company Resilient systems, thus boosting IBM's cybersecurity business, and Optevia, a cloud software integrator, and Bluewolf Group, a cloud software consulting company, playing in leagues with AWS and Microsoft Azure.

Other acquisitions made by IBM in 2016 include Ustream Inc, AT&T application and hosting services, G4S's cash solutions business, Sanovi Technologies Private Limited, Resource/Ammirati, ecx International AG, Aperto AG, Bluewolf Group LLC, Fluid's Inc's Expert Personal Shopper (XPS), Resilient Systems Inc, EZ Legacy Ltd, and Promonotory Financial Group LLC. The total investment for all the acquisitions in 2016 was US$5.9 billion. 

For the year 2017, IBM made the following acquisitions namely Agile 3 solutions LLC, Cloudigo Ltd, XCC web content/Custom Apps, and Viviant Digital, with an investment of US$134 million. Of which the acquisition of Cloudigo, an Israeli data centre start-up created the buzz. With no financial disclosure of the acquisition, Cloudigo's data centre infrastructure is integrated with IBM Watson, for advanced network processing. Moreover, the team is building the Cloud Innovation Lab, which is part of the IBM Cloud Infrastructure Group.

In 2018, two companies Armanta Incorporated and Oniqua Holdings Pty Ltd were acquired by IBM for US$49 million. Armanta Inc. is a developer of analytics software for financial firms that is integrated with IBM's Watson Financial Services Portfolio, whereas Oniqua Holdings Pty Ltd, a maintenance Repair and Operations inventory Optimizations solutions and services company will be integrated with IBM's IoT capabilities to assist mining, oil & gas, transportation utilities, manufacturing and other asset-intensive businesses with critical insights and risk management.

Apart from this, IBM continues its investments in furthering its portfolio. In 2019, the company acquired Red Hat, the world's leading open source technology provider for enterprises, for US$34 billion. The acquisition positions IBM as the leading hybrid cloud provider and expedites its high-value business model, extending Red Hat's open source innovation to a broader range of clients.

The Future Outlook

The Future Outlook

IBM will continue to enhance its position as the world's leader in cloud platforms and cognitive solutions through breakthrough innovations. The company will help its clients to unlock the full business value of the cloud. Today, AI and other advanced technologies are substantially changing the very nature of work. Hence, to keep up with the rate and pace of these changes, IBM will further invigorate its workforce skills.